Celanese Corp 8-K, filed Jan 30, 2020
Celanese Corp (CE)
8-K
2020-01-30
For: 2020-01-30
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Added on
April 12, 2026
About this 8-K
Celanese Corp filed this 8-K on January 30, 2020.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 30, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972 ) 443-4000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 7.01 Regulation FD Disclosure
On January 31, 2020, Lori J. Ryerkerk, Chief Executive Officer and President of Celanese Corporation (the "Company"), will make a presentation to investors and analysts via a webcast hosted by the Company at 10:00 a.m. ET (9:00 a.m. CT). The webcast, press release and prepared remarks from management may be accessed on our website at investors.celanese.com under News & Events. A copy of the prepared remarks posted for the webcast are attached to this Current Report on Form 8-K ("Current Report") as Exhibit 99.1(a) and is incorporated herein solely for purposes of this Item 7.01 disclosure. During the webcast, management may make, and management's prepared remarks contain, references to certain Non-US GAAP financial measures. Non-US GAAP financial measures appearing in management's prepared remarks are accompanied by the most directly comparable US GAAP financial measure. In addition, those Non-US GAAP financial measures are defined and reconciled to the most comparable US GAAP financial measure in our Non-US GAAP Financial Measures and Supplemental Information document filed with this Current Report as Exhibit 99.2 (and available on our website) and is incorporated herein solely for purpose of this Item 7.01 disclosure.
Item 9.01 Financial Statements and Exhibits
(d) The following exhibits are being filed herewith:
Exhibit Number | ||
Description | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
* In connection with the disclosure set forth in Item 7.01, the information in this Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing. This Current Report will not be deemed an admission as to the materiality of any information in this Current Report that is required to be disclosed solely by Regulation FD.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CELANESE CORPORATION | |||
By: | /s/ JAMES R. PEACOCK III | ||
Name: | James R. Peacock III | ||
Title: | Vice President, Deputy General Counsel and Corporate Secretary | ||
Date: | |||
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Exhibit 99.1(a)
Q4 2019 Earnings Prepared Comments
Chuck Kyrish, Celanese Corporation, Vice President, Investor Relations and Treasurer
This is the Celanese Corporation fourth quarter 2019 earnings prepared comments. The Celanese Corporation fourth quarter 2019 earnings release was distributed via Business Wire this afternoon and posted on our investor relations website, investors.celanese.com. As a reminder, some of the matters discussed below may include forward-looking statements concerning, for example, our future objectives and plans. Please note the cautionary language contained at the end of these comments. Also, some of the matters discussed include references to non-GAAP financial measures. Explanations of these measures and reconciliations to the comparable GAAP measures are included on our investor relations website under Financial Information/Non-GAAP Financial Measures. The earnings release and non-GAAP information and the reconciliations are being furnished to the SEC in a Current Report on Form 8-K. These prepared comments are also being furnished to the SEC in a separate Current Report on Form 8-K.
On the earnings conference call tomorrow morning, management will be available to answer questions.
Lori Ryerkerk, Celanese Corporation, Chief Executive Officer
Today, I am pleased to report adjusted earnings of $9.53 per share and free cash flow of $1.1 billion for 2019. As I reflect on my first year at Celanese, a year of many different challenges, I am continually impressed by our teams around the world, who executed on countless controllable action plans through the last day of 2019 to deliver the second best adjusted earnings per share in our history. Despite the most difficult demand backdrop we have seen since the last major recession, our teams successfully closed out a decade in which we delivered annualized earnings per share growth of 13 percent and annualized free cash flow growth of 18 percent.
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With a steadfast focus on the factors within our control, we extended a lengthy track record of generating long-term shareholder value across a variety of external market environments. As you will recall, we entered 2019 with softening global demand conditions, driven by the uncertainty of a US-China trade war that was six months old at the time but would continue unresolved for the remainder of the year. A series of anticipated resolutions never materialized and further deteriorated economic sentiment, particularly in Asia, where consumer demand for things like automobiles and electronics fell sharply. Trade uncertainty paired with inconsistent consumer activity drove multi-quarter destocking across the industry. Finally, we saw meaningfully lower demand due to a seasonally weaker fourth quarter in Engineered Materials than anticipated and a few unique dynamics I will address later. Throughout the year, we implemented controllable action plans centered on productivity efforts as well as prudent and effective capital deployment to respond to these challenges and further strengthened our unique business models. As a result of these efforts, we meaningfully offset significant demand headwinds across the company.
Turning now to our individual businesses. In the Acetyl Chain, we closed out 2019 to deliver full year adjusted EBIT of $727 million, again displaying the higher foundational earnings of that business. Net sales for the Acetyl Chain were $3.4 billion, down 16 percent year over year as a result of the combined impact of a 13 percent decline in pricing and a 2 percent currency headwind. Sluggish demand through most of 2019, paired with less unplanned outage and curtailment activity year over year, resulted in acetic acid industry utilization that was approximately 7 percent lower than 2018. This was particularly acute in China where average acetic acid pricing fell about 40 percent over the prior year, resulting in a year over year pricing headwind for us of approximately $300 million in acetic acid alone. Related year over year pricing declines across the full spectrum of acetic acid derivatives contributed an additional $300 million pricing headwind. To offset much of this dynamic, the Acetyl Chain pivoted away from acetic acid markets where pricing fell to multi-year lows and placed 8 percent more tonnage downstream in VAM and emulsions where consumption patterns and trading conditions were relatively stable. At the same time, in 2019 the business sold 9 percent less volume of acetic acid, VAM, and emulsions in Asia where pricing
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was weakest and redirected incremental volume to the Western Hemisphere. Remarkably, despite the Clear Lake incident the Acetyl Chain was able to place a total volume in 2019 essentially equivalent to the prior year and deliver sustainably elevated adjusted EBIT margin of 21 percent.
As a final full year data point, in 2019 we saw a near exact reversal of the favorable industry dynamics that supported a record year in the Acetyl Chain in 2018. While both Acetyl Chain net sales and volume in 2019 were practically identical to 2017, our intentional focus and execution across our global network, contractual positioning, and derivative optionality generated adjusted EBIT of approximately $150 million or 26 percent higher performance relative to 2017, even including the $20 million impact of the Clear Lake incident. This clearly substantiates the meaningful lift in the foundation level of earnings of this business.
Let me provide an update on the status of Clear Lake before addressing the fourth quarter. All our production units at Clear Lake are again fully operational, including the carbon monoxide (CO) production facility. I would like to thank our local teams who worked tirelessly to repair and restart those facilities safely and expeditiously. While we were able to restart the CO unit in the middle of the fourth quarter as expected, it took longer than anticipated to ramp up to full operating rates and subsequently limited production output of units downstream to CO. As a result, Clear Lake operated at only 40 percent utilization across the fourth quarter. Our teams did an exceptional job of minimizing lost sales and utilizing our global production network and industry relationships to limit the impact on fourth quarter adjusted EBIT to approximately $20 million, including lost sales and higher product costs.
Including the impact of the Clear Lake incident, the Acetyl Chain reported fourth quarter adjusted EBIT of $144 million at a margin of 19 percent. Despite limited availability of the largest acetyls production facility in the world within the fourth quarter, we continued to see acetic acid pricing unexpectedly deteriorate from third quarter levels to about $300 per ton in China at year end. Our teams continued to focus on downstream opportunities in VAM and emulsions, placing an incremental 6 percent there versus
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the same period last year. As a result, the Acetyl Chain delivered fourth quarter adjusted EBIT of $144 million, a performance consistent with the prior three quarters of 2019 considering the $20 million impact of the Clear Lake incident and $20 to $30 million of normal winter seasonality.
Looking ahead, the Acetyl Chain is preparing for an especially significant turnaround period in the first half of the year including triennial turnarounds at Clear Lake and Nanjing acetic acid and the inaugural quadrennial turnaround at Clear Lake methanol. We believe that the sustainable earnings level of the Acetyl Chain remains $750 to $800 million per year under current economic conditions. We expect the Acetyl Chain to deliver first quarter adjusted EBIT performance consistent with this earnings level before accounting for approximately $15 to $20 million of turnaround related expense primarily due to the methanol turnaround.
We continue to strategically invest in expanding the breadth and flexibility of the integrated product chain in this business. The Clear Lake VAM expansion completed one year ago has provided us with added flexibility to dynamically shift downstream in environments like we see today. We still have the opportunity to implement similar low-capital expansions at our other four VAM facilities in the future. One year ago, we announced the global acetic acid reconfiguration that will further scale the largest and most cost efficient acetic acid facility in the world at Clear Lake. This project is on pace to be completed late next year and begin delivering approximately $100 million of annualized savings. In support of that reconfiguration, we announced shortly thereafter an expansion of our methanol joint venture facility to 125 percent of the original nameplate. Earlier this week, we announced the strategic expansion of the global emulsion polymers production network to extend and strengthen the Acetyl Chain downstream beyond acetic acid and VAM. We will increase our VAE emulsion capacities at Nanjing, China and Geleen, Netherlands via separate debottleneck and expansion projects at each site. Finally, we were also pleased to announce a definitive agreement to acquire Elotex, a leading global manufacturer of redispersible polymer powders. While providing very modest incremental adjusted EBIT to 2020, this acquisition further extends our integrated product chain one level deeper and creates new derivatization
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optionality for us beyond emulsions. Over the course of the last two years, we have put in place strategic actions and investments at every level of the Acetyl Chain that ultimately drive productivity savings, prepare us for future demand, and most importantly expand the optionality that is so critical to our unique business model.
Engineered Materials delivered resilient full year 2019 results, reporting adjusted EBIT of $621 million. The 11 percent decline in adjusted EBIT relative to 2018 was primarily driven by affiliate contributions which fell by $51 million over the same period. GAAP operating profit, which excludes affiliate performance, declined by just 3 percent year over year. Net sales for 2019 were $2.4 billion, down 8 percent over the prior year, due to a 5 percent decline in volume and a 3 percent currency headwind. By continuing to execute on our project pipeline model which delivered over 4,000 project wins during the year, exercising pricing discipline, and driving variable and fixed cost productivity, our teams were able to offset the vast majority of demand headwinds in the year. These headwinds, related to broad demand softness particularly in automotive and consumer electronics and multi-quarter destocking across our value chains, were substantial. Our results in the face of such challenges again show the power of our business model, people, and technologies. Beyond this, our teams were aggressive in maintaining pricing levels for as long as possible amid such demand instability and successfully raised prices in certain specialized applications. In some cases we stepped away from business with unacceptable price erosion due to competitive dynamics in order to preserve longer-term margins and our teams won alternative business. By executing on our Engineered Materials business model as well as delivering incremental productivity savings within the year, we were able to offset the vast majority of year over year earnings headwinds to the base engineered materials business that totaled well over $100 million by our math. As a result, the engineered materials adjusted EBIT, excluding affiliates, was down just over $20 million for the full year while equivalent margins actually expanded year over year by 70 basis points to 19 percent.
Before moving on to recent quarter dynamics, I would like to address a topic we have been asked about periodically this year, which is the impact of project wins on Engineered Materials volume. The project
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pipeline model is the basis for everything we do in this business and remains the primary driver for our differentiated performance. This model aligns the efforts of over 3,000 employees squarely on the business opportunities that we are likely to win and that will create the most value. In past years, with normalized demand growth of roughly 3 percent across our applications, this model allowed us to achieve high-single digit volume growth, an incremental mid-single digit lift. This lift beyond underlying demand conditions is intact. In 2019, the majority of our application spaces were flat or down, with significant demand declines in two of our largest applications. Global automotive builds fell 6 percent year over year while global smartphone shipments, a good gauge for consumer electronics, fell for the third consecutive year. The impact of destocking, while difficult to quantify, certainly further exacerbated reduced consumer demand. Without the project pipeline model, we expect our volumes would have been solidly down double digits versus 2018, consistent with many of our customers and direct competitors, and not down just 5 percent. While project wins each quarter are entirely reflective of the level of real-time activity we have with our customers, we understand that they do not perfectly correlate to short-term changes in volume due to a number of factors. As a result, moving forward we will give less emphasis to quarterly project wins and instead share more detail on new and existing project programs which will reflect how we are aligning our commercial and technical activities with industry trends and customer innovation. As an organization we will continue to not only scale the number of projects we win each year, but to improve the quality and value creation of each.
Focusing now on the fourth quarter, Engineered Materials reported adjusted EBIT of $136 million at a margin of just over 25 percent. Net sales of $539 million in the quarter were down 9 percent sequentially on a 9 percent decline in volume versus the third quarter, due primarily to weaker than anticipated fourth quarter demand. In recent years, demand in the Western Hemisphere has slowed by mid single digits toward year end and typically been largely offset by continued volume growth in Asia. This was the case in 2018 when fourth quarter seasonality was limited to a 3 percent sequential decline in net sales. This year, we saw sequential double digit net sales declines in both the US and Europe, primarily due to a
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significant portion of the customer base slowing or stopping production for longer than typical during the holiday period. At the same time, sequential fourth quarter net sales in Asia were flat due to continued demand softness there and did not help to offset the Western Hemisphere softness as anticipated. As part of this we saw notable incremental demand softness in industrial applications due to the lagging impact of several months of declining industrial production levels, particularly in Europe. Lastly, the General Motors strike was more impactful to the fourth quarter than anticipated. Following auto destocking throughout the year, we anticipated that particular OEM supply chain to quickly return to full activity following resolution of the dispute. What we saw instead was a number of tier players actually running at reduced rates well beyond the strike. You will recall through the first three quarters of 2019, the engineered materials base business was flat over the same period in 2018. We are confident the same would have been true for the full year 2019 if not for these unexpected dynamics unique to the fourth quarter.
Looking to 2020, we remain focused on initiatives to strengthen the cost structure of Engineered Materials and improve our overall efficiency. As part of this, we continue to optimize our global production footprint, including sites we have acquired over the last several years. In 2019, we rationalized our production at sites in Castel Goffredo, Italy and Lebanon, Tennessee, consolidating that volume to other existing lower cost facilities. Those two moves were critical components of our ongoing efforts to drive synergies out of our acquisitions in this business. As our most recent optimization step, we have initiated preparations to consolidate compounding operations at our legacy production facility at Shelby, North Carolina by the middle of 2020, also moving that volume to other existing facilities. Numerous projects to more fully automate our supply chain systems and processes are already being implemented in stages. These projects are extremely capital efficient and will improve how we plan production across a global network of facilities. By executing our model and taking these controllable actions we will resume adjusted EBIT growth of 10 percent in 2020, some of which will be offset by $30 to $40 million of turnaround associated expenses, which will occur almost entirely in the first half of the year.
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As part of the optimization of our global Engineered Materials supply chain I just described, we recognized that there is a tremendous opportunity for us to get closer to our customers in Asia, especially in China. While we have local production in both Nanjing and Suzhou and recently commissioned two new compounding lines at those facilities, they do not currently meet demand levels in China and there are still a number of highly differentiated products we must ship from the US or Europe. As our customers in China continue to create more sophisticated products, in many cases as differentiated as their Western equivalents, we must be more closely aligned and responsive to their needs in the development process. This is particularly critical in a number of innovative spaces where China is a major global participant like battery storage, electric/hybrid vehicles, and 5G wireless communications. In response to this opportunity, we have completed a thorough strategic review of the options for greater localization within China via both organic and inorganic investment. We have concluded that organic investment will provide us with optimized production capacity by product as well as the highest capital returns. We are progressing in identifying the ideal location and scale for such an investment and will share more in the coming months.
Acetate Tow reported 2019 adjusted EBIT of $268 million, consistent with the prior year performance. Net sales of $636 million were down 2 percent over 2018 as a result of 2 percent lower volume. Looking at the fourth quarter, the business delivered $54 million of adjusted EBIT, down sequentially as a result of certain timing factors including affiliate contributions, and consistent with the fourth quarter 2018 as expected. At the end of October we successfully finalized the consolidation of the production facility in Ocotlán, Mexico, moving that volume to our remaining tow facilities. This productivity project, as well as numerous others, remains the key to us continuing to offset the secular decline in cigarette use. Turning to 2020, we continue to see a stable earnings profile in this business and anticipate first quarter adjusted EBIT more in line with the third quarter of 2019. We continue to engage in selective development work around alternative uses of acetate tow, such as bio-based plastics, where there is growing customer interest. Today, all alternative uses of tow combined remain a small percentage of global acetate tow demand.
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To wrap all of this up, you will recall that in October we did not have visibility to any improvement in demand fundamentals. In fact, fourth quarter demand conditions across all regions were meaningfully softer than we had anticipated in October. As a result, we continue to focus our 2020 guidance for adjusted earnings per share entirely on controllable actions. In the Acetyl Chain, we are investing at all points to extend the optionality in what is already the broadest integrated product chain in the industry. In Engineered Materials, global supply chain improvements and other productivity initiatives as well as continued pricing discipline will drive earnings growth in 2020. Productivity and capital deployment priorities will be the primary drivers to meet our aspiration for 2020 adjusted earnings of $11 per share, generating year over year growth of 15 percent. We expect earnings per share this year to be more heavily weighted to the back half of the year due to approximately $70 to $80 million of 2020 turnaround costs that will almost entirely occur in the first half and accumulating benefits from productivity and share repurchases as we progress through the year. As a result, we expect the adjusted earnings in the second half of the year to be approximately $1 per share higher than the first half. By focusing on the factors we can control, we successfully weathered an exceptionally challenging demand environment in 2019 and remain positioned to reach on our long-term growth ambitions in 2020 and beyond.
Scott Richardson, Celanese Corporation, Chief Financial Officer
Before discussing our robust free cash flow and how we are deploying it, I would like to reconcile GAAP diluted earnings per share and adjusted earnings per share for the fourth quarter. Certain Items totaling $238 million in the quarter were primarily comprised of a reserve of $89 million that was based on information received from the European Commission regarding its competition law investigation and $88 million related to a normal fourth quarter pension mark to market adjustment. Additionally, an adjustment of $32 million related to the Clear Lake incident reflected cleanup costs and direct incremental expenses.
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As Lori highlighted, in 2019 we generated operating cash flow of $1.5 billion and free cash flow of $1.1 billion. With a number of cash conversion initiatives including working capital improvements, we delivered remarkably resilient free cash flow levels in the year despite significant earnings headwinds on weakened global demand. As a result, we were able to return a record $1.3 billion of cash to our shareholders, via $1.0 billion in share repurchases and $300 million in dividends, while funding all organic opportunities that met our return thresholds. Lori discussed multiple organic investments across our businesses that will not only prepare us for future growth, but simultaneously drive productivity savings by increasing our production scale and getting us closer to our customers. Additionally, we are thrilled to have recently announced our first bolt-on acquisition in the Acetyl Chain that will increase our ability to flex production down the chain in response to market dynamics. Our disciplined capital allocation strategy continues to drive robust value creation, evidenced by a continued return on invested capital of 20 percent for 2019.
Capex was $370 million for the year, about $30 million higher than 2018, as we continue to prioritize investments in our business through capital efficient and productivity-based expansions in the Acetyl Chain and Engineered Materials. This year we expect capex of approximately $500 million, with the year over year increase largely due to the global acetic acid reconfiguration and methanol expansion.
The effective US GAAP tax rate was 13 percent for 2019 compared to 19 percent for 2018. The lower effective tax rate for 2019 was due to release of valuation allowance on foreign tax credit carryforwards resulting from the cost allocation methodology analysis we discussed last quarter and changes resulting from new treasury guidance issued in the fourth quarter. For 2020, we expect a likely effective tax rate for adjusted earnings of 13 percent with the possibility of that approaching 14 percent, depending on the mix of jurisdictional earnings.
Our productivity work and capital deployment will lead the way in achieving adjusted earnings per share of $11 in 2020. We continue to focus on strengthening our cash generation capabilities and anticipate free
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cash flow approaching $900 million in 2020, down year over year due to an increase in high-return organic investment and the $89 million reserve related to the European Commission investigation.
This concludes our prepared remarks. We look forward to discussing our fourth quarter results and addressing your questions on our earnings call tomorrow.
Forward-Looking Statements
These prepared comments contain "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues, performance, capital expenditures, and other information that is not historical information. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements contained in these comments. These risks and uncertainties include, among other things: changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate; the length and depth of product and industry business cycles, particularly in the automotive, electrical, textiles, electronics and construction industries; changes in the price and availability of raw materials, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources; the ability to pass increases in raw material prices on to customers or otherwise improve margins through price increases; the ability to maintain plant utilization rates and to implement planned capacity additions and expansions; the ability to reduce or maintain current levels of production costs and to improve productivity by implementing technological improvements to existing plants; the ability to identify desirable potential acquisition targets and to consummate acquisition or investment transactions consistent with the Company's strategy; increased price competition and the introduction of competing products by other companies; market acceptance of our technology; the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to the Company; changes in tariffs, tax rates or legislation; changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property; compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, cyber security incidents, terrorism or political unrest or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather or natural disasters; potential liability for remedial actions and increased costs under existing or future environmental regulations, including those relating to climate change; potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies of governments or other governmental activities in the countries in which we operate; changes in currency exchange rates and interest rates; our level of indebtedness, which could diminish our ability to raise additional capital to fund operations or limit our ability to react to changes in the economy or the chemicals industry; and various other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
Results Unaudited
The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.
Non-GAAP Financial Measures
These prepared comments, and statements made in connection with these prepared comments, refer to non-GAAP financial measures. For more information on the non-GAAP financial measures used by the Company, including the most directly comparable GAAP financial measure for each non-GAAP financial measures used, including definitions and reconciliations of the differences between such non-GAAP financial measures and the comparable GAAP financial measures, please refer to the Non-US GAAP Financial Measures and Supplemental Information document available on our website, investors.celanese.com, under Financial Information/Financial Document Library.
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Exhibit 99.2
Non-US GAAP Financial Measures and Supplemental Information
January 30, 2020
In this document, the terms the "Company," "we" and "our" refer to Celanese Corporation and its subsidiaries on a consolidated basis.
Purpose
The purpose of this document is to provide information of interest to investors, analysts and other parties including supplemental financial information and reconciliations and other information concerning our use of non-US GAAP financial measures. This document is updated quarterly.
Presentation
This document presents the Company's three business segments, Engineered Materials, Acetate Tow and Acetyl Chain.
Use of Non-US GAAP Financial Measures
From time to time, management may publicly disclose certain numerical "non-GAAP financial measures" in the course of our earnings releases, financial presentations, earnings conference calls, investor and analyst meetings and otherwise. For these purposes, the Securities and Exchange Commission ("SEC") defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with US GAAP, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable US GAAP measure so calculated and presented. For these purposes, "GAAP" refers to generally accepted accounting principles in the United States.
Non-GAAP financial measures disclosed by management are provided as additional information to investors, analysts and other parties because the Company believes them to be important supplemental measures for assessing our financial and operating results and as a means to evaluate our financial condition and period-to-period comparisons. These non-GAAP financial measures should be viewed as supplemental to, and should not be considered in isolation or as alternatives to, net earnings (loss), operating profit (loss), operating margin, cash flow from operating activities (together with cash flow from investing and financing activities), earnings per share or any other US GAAP financial measure. These non-GAAP financial measures should be considered within the context of our complete audited and unaudited financial results for the given period, which are available on the Financial Information/Financial Document Library page of our website, investors.celanese.com. The definition and method of calculation of the non-GAAP financial measures used herein may be different from other companies' methods for calculating measures with the same or similar titles. Investors, analysts and other parties should understand how another company calculates such non-GAAP financial measures before comparing the other company's non-GAAP financial measures to any of our own. These non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive or projections of future results.
Pursuant to the requirements of SEC Regulation G, whenever we refer to a non-GAAP financial measure, we will also present in this document, in the presentation itself or on a Form 8-K in connection with the presentation on the Financial Information/Financial Document Library page of our website, investors.celanese.com, to the extent practicable, the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.
This document includes definitions and reconciliations of non-GAAP financial measures used from time to time by the Company.
Specific Measures Used
This document provides information about the following non-GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, operating EBITDA margin, operating profit (loss) attributable to Celanese Corporation, adjusted earnings per share, net debt, free cash flow and return on invested capital (adjusted). The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin and operating EBITDA margin is operating margin; for operating profit (loss) attributable to Celanese Corporation is operating profit (loss); for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; for net debt is total debt; for free
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cash flow is net cash provided by (used in) operations; and for return on invested capital (adjusted) is net earnings (loss) attributable to Celanese Corporation divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation stockholders' equity.
Definitions
• | Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items (refer to Table 8). We believe that adjusted EBIT provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of unusual, non-operational or restructuring-related activities that affect comparability. Our management recognizes that adjusted EBIT has inherent limitations because of the excluded items. Adjusted EBIT is one of the measures management uses for planning and budgeting, monitoring and evaluating financial and operating results and as a performance metric in the Company's incentive compensation plan. We do not provide reconciliations for adjusted EBIT on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales. Adjusted EBIT margin has the same uses and limitations as Adjusted EBIT. |
• | Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization. We believe that Operating EBITDA provides transparent and useful information to investors, analysts and other parties in evaluating our operating performance relative to our peer companies. Operating EBITDA margin is defined by the Company as Operating EBITDA divided by net sales. Operating EBITDA margin has the same uses and limitations as Operating EBITDA. |
• | Operating profit (loss) attributable to Celanese Corporation is defined by the Company as operating profit (loss), less earnings (loss) attributable to noncontrolling interests ("NCI"). We believe that operating profit (loss) attributable to Celanese Corporation provides transparent and useful information to management, investors, analysts and other parties in evaluating our core operational performance. Operating margin attributable to Celanese Corporation is defined by the Company as operating profit (loss) attributable to Celanese Corporation divided by net sales. Operating margin attributable to Celanese Corporation has the same uses and limitations as Operating profit (loss) attributable to Celanese Corporation. |
• | Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We believe that adjusted earnings per share provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of the above stated items that affect comparability and as a performance metric in the Company's incentive compensation plan. We do not provide reconciliations for adjusted earnings per share on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. |
Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes and changes in management's assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. Table 3a summarizes the reconciliation of our estimated GAAP effective tax rate to the adjusted tax rate. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results.
2
• | Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our methanol joint venture, Fairway Methanol LLC ("Fairway"). We believe that free cash flow provides useful information to management, investors, analysts and other parties in evaluating the Company's liquidity and credit quality assessment because it provides an indication of the long-term cash generating ability of our business. Although we use free cash flow as a measure to assess the liquidity generated by our business, the use of free cash flow has important limitations, including that free cash flow does not reflect the cash requirements necessary to service our indebtedness, lease obligations, unconditional purchase obligations or pension and postretirement funding obligations. |
• | Net debt is defined by the Company as total debt less cash and cash equivalents. We believe that net debt provides useful information to management, investors, analysts and other parties in evaluating changes to the Company's capital structure and credit quality assessment. |
• | Return on invested capital (adjusted) is defined by the Company as adjusted EBIT, tax effected using the adjusted tax rate, divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation stockholders' equity. We believe that return on invested capital (adjusted) provides useful information to management, investors, analysts and other parties in order to assess our income generation from the point of view of our stockholders and creditors who provide us with capital in the form of equity and debt and whether capital invested in the Company yields competitive returns. |
Supplemental Information
Supplemental Information we believe to be of interest to investors, analysts and other parties includes the following:
• | Net sales for each of our business segments and the percentage increase or decrease in net sales attributable to price, volume, currency and other factors for each of our business segments. |
• | Cash dividends received from our equity investments. |
• | For those consolidated ventures in which the Company owns or is exposed to less than 100% of the economics, the outside stockholders' interests are shown as NCI. Beginning in 2014, this includes Fairway for which the Company's ownership percentage is 50%. Amounts referred to as "attributable to Celanese Corporation" are net of any applicable NCI. |
Results Unaudited
The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.
3
Table 1
Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||
(In $ millions) | |||||||||||||||||||||||||||||
Net earnings (loss) attributable to Celanese Corporation | 852 | 43 | 263 | 209 | 337 | 1,207 | 99 | 401 | 344 | 363 | |||||||||||||||||||
(Earnings) loss from discontinued operations | 6 | (1 | ) | 5 | 1 | 1 | 5 | (3 | ) | 6 | — | 2 | |||||||||||||||||
Interest income | (6 | ) | (2 | ) | (1 | ) | (2 | ) | (1 | ) | (6 | ) | (2 | ) | (2 | ) | — | (2 | ) | ||||||||||
Interest expense | 115 | 28 | 27 | 29 | 31 | 125 | 30 | 30 | 32 | 33 | |||||||||||||||||||
Refinancing expense | 4 | — | — | 4 | — | 1 | 1 | — | — | — | |||||||||||||||||||
Income tax provision (benefit) | 124 | (3 | ) | 53 | 28 | 46 | 292 | 76 | 54 | 97 | 65 | ||||||||||||||||||
Certain Items attributable to Celanese Corporation (Table 8) | 381 | 238 | 29 | 107 | 7 | 228 | 192 | 5 | 18 | 13 | |||||||||||||||||||
Adjusted EBIT | 1,476 | 303 | 376 | 376 | 421 | 1,852 | 393 | 494 | 491 | 474 | |||||||||||||||||||
Depreciation and amortization expense(1) | 329 | 84 | 82 | 82 | 81 | 316 | 78 | 77 | 82 | 79 | |||||||||||||||||||
Operating EBITDA | 1,805 | 387 | 458 | 458 | 502 | 2,168 | 471 | 571 | 573 | 553 | |||||||||||||||||||
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||
(In $ millions) | |||||||||||||||||||||||||||||
Engineered Materials | 4 | 2 | 1 | — | 1 | 1 | — | — | 1 | — | |||||||||||||||||||
Acetate Tow | 9 | 2 | 5 | 2 | — | 19 | 5 | 11 | 3 | — | |||||||||||||||||||
Acetyl Chain | 10 | 3 | 6 | — | 1 | 7 | 5 | 2 | — | — | |||||||||||||||||||
Other Activities(2) | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Accelerated depreciation and amortization expense | 23 | 7 | 12 | 2 | 2 | 27 | 10 | 13 | 4 | — | |||||||||||||||||||
Depreciation and amortization expense(1) | 329 | 84 | 82 | 82 | 81 | 316 | 78 | 77 | 82 | 79 | |||||||||||||||||||
Total depreciation and amortization expense | 352 | 91 | 94 | 84 | 83 | 343 | 88 | 90 | 86 | 79 | |||||||||||||||||||
______________________________
(1) | Excludes accelerated depreciation and amortization expense as detailed in the table above, which amounts are included in Certain Items above. |
(2) | Other Activities includes corporate Selling, general and administrative ("SG&A") expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses). |
4
Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited |  | |
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In $ millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Profit (Loss) / Operating Margin | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 446 | 18.7 | % | 88 | 16.3 | % | 111 | 18.8 | % | 103 | 17.4 | % | 144 | 21.7 | % | 460 | 17.7 | % | 95 | 15.3 | % | 124 | 19.3 | % | 114 | 17.2 | % | 127 | 19.1 | % | |||||||||||||||||||||||||||||
Acetate Tow | 52 | 8.2 | % | 22 | 14.9 | % | 34 | 21.5 | % | (44 | ) | (26.8 | )% | 40 | 24.1 | % | 130 | 20.0 | % | 19 | 11.8 | % | 26 | 16.5 | % | 39 | 24.1 | % | 46 | 27.4 | % | ||||||||||||||||||||||||||||
Acetyl Chain(1) | 678 | 20.0 | % | 108 | 14.0 | % | 180 | 20.8 | % | 188 | 21.7 | % | 202 | 22.7 | % | 1,024 | 25.3 | % | 211 | 22.5 | % | 287 | 28.5 | % | 273 | 26.0 | % | 253 | 24.1 | % | |||||||||||||||||||||||||||||
Other Activities(2) | (342 | ) | (150 | ) | (65 | ) | (61 | ) | (66 | ) | (280 | ) | (66 | ) | (63 | ) | (68 | ) | (83 | ) | |||||||||||||||||||||||||||||||||||||||
Total | 834 | 13.2 | % | 68 | 4.7 | % | 260 | 16.4 | % | 186 | 11.7 | % | 320 | 19.0 | % | 1,334 | 18.6 | % | 259 | 15.3 | % | 374 | 21.1 | % | 358 | 19.4 | % | 343 | 18.5 | % | |||||||||||||||||||||||||||||
Less: Net Earnings (Loss) Attributable to NCI(1) | 6 | 2 | 2 | 1 | 1 | 6 | 2 | 1 | 1 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Operating Profit (Loss) Attributable to Celanese Corporation | 828 | 13.1 | % | 66 | 4.6 | % | 258 | 16.3 | % | 185 | 11.6 | % | 319 | 18.9 | % | 1,328 | 18.6 | % | 257 | 15.2 | % | 373 | 21.1 | % | 357 | 19.4 | % | 341 | 18.4 | % | |||||||||||||||||||||||||||||
Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 446 | 18.7 | % | 88 | 16.3 | % | 111 | 18.8 | % | 103 | 17.4 | % | 144 | 21.7 | % | 460 | 17.7 | % | 95 | 15.3 | % | 124 | 19.3 | % | 114 | 17.2 | % | 127 | 19.1 | % | |||||||||||||||||||||||||||||
Acetate Tow | 52 | 8.2 | % | 22 | 14.9 | % | 34 | 21.5 | % | (44 | ) | (26.8 | )% | 40 | 24.1 | % | 130 | 20.0 | % | 19 | 11.8 | % | 26 | 16.5 | % | 39 | 24.1 | % | 46 | 27.4 | % | ||||||||||||||||||||||||||||
Acetyl Chain(1) | 672 | 19.8 | % | 106 | 13.7 | % | 178 | 20.5 | % | 187 | 21.6 | % | 201 | 22.6 | % | 1,018 | 25.2 | % | 209 | 22.3 | % | 286 | 28.4 | % | 272 | 25.9 | % | 251 | 23.9 | % | |||||||||||||||||||||||||||||
Other Activities(2) | (342 | ) | (150 | ) | (65 | ) | (61 | ) | (66 | ) | (280 | ) | (66 | ) | (63 | ) | (68 | ) | (83 | ) | |||||||||||||||||||||||||||||||||||||||
Total | 828 | 13.1 | % | 66 | 4.6 | % | 258 | 16.3 | % | 185 | 11.6 | % | 319 | 18.9 | % | 1,328 | 18.6 | % | 257 | 15.2 | % | 373 | 21.1 | % | 357 | 19.4 | % | 341 | 18.4 | % | |||||||||||||||||||||||||||||
Equity Earnings and Dividend Income, Other Income (Expense) Attributable to Celanese Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 168 | 45 | 41 | 36 | 46 | 219 | (3) | 49 | 62 | 54 | 54 | ||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | 112 | 24 | 27 | 29 | 32 | 116 | 25 | 26 | 33 | 32 | |||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | 5 | 1 | 2 | 1 | 1 | 8 | 1 | 2 | 3 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | 2 | — | 2 | 1 | (1 | ) | 15 | 8 | 1 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | 287 | 70 | 72 | 67 | 78 | 358 | 83 | 91 | 90 | 94 | |||||||||||||||||||||||||||||||||||||||||||||||||
Non-Operating Pension and Other Post-Retirement Employee Benefit (Expense) Income Attributable to Celanese Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | (20 | ) | (71 | ) | 17 | 17 | 17 | (62 | ) | (139 | ) | 25 | 26 | 26 | |||||||||||||||||||||||||||||||||||||||||||||
Total | (20 | ) | (71 | ) | 17 | 17 | 17 | (62 | ) | (139 | ) | 25 | 26 | 26 | |||||||||||||||||||||||||||||||||||||||||||||
Certain Items Attributable to Celanese Corporation (Table 8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 7 | 3 | 2 | 9 | (7 | ) | 15 | 6 | 1 | 7 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | 104 | 8 | 10 | 86 | — | 27 | 9 | 13 | 5 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | 50 | 37 | 11 | 1 | 1 | (4 | ) | 5 | (11 | ) | 2 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | 220 | 190 | 6 | 11 | 13 | 190 | 172 | 2 | 4 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | 381 | 238 | 29 | 107 | 7 | 228 | 192 | 5 | 18 | 13 | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBIT / Adjusted EBIT Margin | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 621 | 26.0 | % | 136 | 25.2 | % | 154 | 26.1 | % | 148 | 25.0 | % | 183 | 27.6 | % | 694 | 26.8 | % | 150 | 24.1 | % | 187 | 29.1 | % | 175 | 26.4 | % | 182 | 27.4 | % | |||||||||||||||||||||||||||||
Acetate Tow | 268 | 42.1 | % | 54 | 36.5 | % | 71 | 44.9 | % | 71 | 43.3 | % | 72 | 43.4 | % | 273 | 42.1 | % | 53 | 32.9 | % | 65 | 41.1 | % | 77 | 47.5 | % | 78 | 46.4 | % | |||||||||||||||||||||||||||||
Acetyl Chain | 727 | 21.4 | % | 144 | 18.7 | % | 191 | 22.0 | % | 189 | 21.8 | % | 203 | 22.8 | % | 1,022 | 25.3 | % | 215 | 23.0 | % | 277 | 27.5 | % | 277 | 26.4 | % | 253 | 24.1 | % | |||||||||||||||||||||||||||||
Other Activities(2) | (140 | ) | (31 | ) | (40 | ) | (32 | ) | (37 | ) | (137 | ) | (25 | ) | (35 | ) | (38 | ) | (39 | ) | |||||||||||||||||||||||||||||||||||||||
Total | 1,476 | 23.4 | % | 303 | 21.2 | % | 376 | 23.7 | % | 376 | 23.6 | % | 421 | 25.0 | % | 1,852 | 25.9 | % | 393 | 23.3 | % | 494 | 27.9 | % | 491 | 26.6 | % | 474 | 25.6 | % | |||||||||||||||||||||||||||||
___________________________
(1) | Net earnings (loss) attributable to NCI is included within the Acetyl Chain segment. |
(2) | Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses). |
(3) | Includes $218 million of Equity in net earnings (loss) of affiliates and $1 million of Other income. |
5
Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited (cont.) |  | |
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In $ millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization Expense(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 127 | 33 | 32 | 31 | 31 | 125 | 30 | 31 | 32 | 32 | |||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | 36 | 8 | 9 | 9 | 10 | 39 | 9 | 10 | 10 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | 151 | 39 | 37 | 38 | 37 | 141 | 36 | 34 | 36 | 35 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | 15 | 4 | 4 | 4 | 3 | 11 | 3 | 2 | 4 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | 329 | 84 | 82 | 82 | 81 | 316 | 78 | 77 | 82 | 79 | |||||||||||||||||||||||||||||||||||||||||||||||||
Operating EBITDA / Operating EBITDA Margin | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 748 | 31.3 | % | 169 | 31.4 | % | 186 | 31.5 | % | 179 | 30.2 | % | 214 | 32.3 | % | 819 | 31.6 | % | 180 | 28.9 | % | 218 | 34.0 | % | 207 | 31.2 | % | 214 | 32.2 | % | |||||||||||||||||||||||||||||
Acetate Tow | 304 | 47.8 | % | 62 | 41.9 | % | 80 | 50.6 | % | 80 | 48.8 | % | 82 | 49.4 | % | 312 | 48.1 | % | 62 | 38.5 | % | 75 | 47.5 | % | 87 | 53.7 | % | 88 | 52.4 | % | |||||||||||||||||||||||||||||
Acetyl Chain | 878 | 25.9 | % | 183 | 23.7 | % | 228 | 26.3 | % | 227 | 26.2 | % | 240 | 27.0 | % | 1,163 | 28.8 | % | 251 | 26.8 | % | 311 | 30.9 | % | 313 | 29.8 | % | 288 | 27.4 | % | |||||||||||||||||||||||||||||
Other Activities(2) | (125 | ) | (27 | ) | (36 | ) | (28 | ) | (34 | ) | (126 | ) | (22 | ) | (33 | ) | (34 | ) | (37 | ) | |||||||||||||||||||||||||||||||||||||||
Total | 1,805 | 28.7 | % | 387 | 27.0 | % | 458 | 28.9 | % | 458 | 28.8 | % | 502 | 29.8 | % | 2,168 | 30.3 | % | 471 | 27.9 | % | 571 | 32.2 | % | 573 | 31.1 | % | 553 | 29.9 | % | |||||||||||||||||||||||||||||
___________________________
(1) | Excludes accelerated depreciation and amortization expense, which amounts are included in Certain Items above. See Table 1 for details. |
(2) | Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses). |
6
Table 3
Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||||||||||||||||||||||||||||||||
per share | per share | per share | per share | per share | per share | per share | per share | per share | per share | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In $ millions, except per share data) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations attributable to Celanese Corporation | 858 | 6.89 | 42 | 0.35 | 268 | 2.17 | 210 | 1.67 | 338 | 2.64 | 1,212 | 8.95 | 96 | 0.73 | 407 | 3.00 | 344 | 2.52 | 365 | 2.68 | |||||||||||||||||||||||||||||||||||||||
Income tax provision (benefit) | 124 | (3 | ) | 53 | 28 | 46 | 292 | 76 | 54 | 97 | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations before tax | 982 | 39 | 321 | 238 | 384 | 1,504 | 172 | 461 | 441 | 430 | |||||||||||||||||||||||||||||||||||||||||||||||||
Certain Items attributable to Celanese Corporation (Table 8) | 381 | 238 | 29 | 107 | 7 | 228 | 192 | 5 | 18 | 13 | |||||||||||||||||||||||||||||||||||||||||||||||||
Refinancing and related expenses | 4 | — | — | 4 | — | 1 | 1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted earnings (loss) from continuing operations before tax | 1,367 | 277 | 350 | 349 | 391 | 1,733 | 365 | 466 | 459 | 443 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit on adjusted earnings(1) | (178 | ) | (36 | ) | (38 | ) | (49 | ) | (55 | ) | (243 | ) | (51 | ) | (65 | ) | (64 | ) | (62 | ) | |||||||||||||||||||||||||||||||||||||||
Adjusted earnings (loss) from continuing operations(2) | 1,189 | 9.53 | 241 | 1.99 | 312 | 2.53 | 300 | 2.38 | 336 | 2.62 | 1,490 | 11.00 | 314 | 2.38 | 401 | 2.96 | 395 | 2.90 | 381 | 2.79 | |||||||||||||||||||||||||||||||||||||||
Diluted shares (in millions)(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding | 123.9 | 120.3 | 122.7 | 125.3 | 127.5 | 134.3 | 131.2 | 134.5 | 135.6 | 135.9 | |||||||||||||||||||||||||||||||||||||||||||||||||
Incremental shares attributable to equity awards | 0.8 | 0.6 | 0.6 | 0.5 | 0.7 | 1.1 | 0.9 | 1.0 | 0.7 | 0.5 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total diluted shares | 124.7 | 120.9 | 123.3 | 125.8 | 128.2 | 135.4 | 132.1 | 135.5 | 136.3 | 136.4 | |||||||||||||||||||||||||||||||||||||||||||||||||
______________________________
(1) | Calculated using adjusted effective tax rates (Table 3a) as follows: |
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||||||||||||
(In percentages) | |||||||||||||||||||||||||||||||||||||||
Adjusted effective tax rate | 13 | 13 | 11 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||||||||||
(2) | Excludes the immediate recognition of actuarial gains and losses and the impact of actual vs. expected plan asset returns. |
Actual Plan Asset Returns | Expected Plan Asset Returns | |||||
(In percentages) | ||||||
Q4 '19 & 2019 | 16.7 | 6.5 | ||||
Q4 '18 & 2018 | (3.9 | ) | 6.7 | |||
(3) | Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are positive. |
7
Table 3a
Adjusted Tax Rate - Reconciliation of a Non-GAAP Measure - Unaudited
Actual | |||||
2019 | 2018 | ||||
(In percentages) | |||||
US GAAP annual effective tax rate | 13 | 19 | |||
Utilization of foreign tax credits | (3 | ) | — | ||
Changes in valuation allowances, excluding impact of other charges and adjustments(1) | 3 | (5 | ) | ||
Adjusted tax rate | 13 | 14 | |||
______________________________
Note: As part of the year-end reconciliation, we updated the reconciliation of the GAAP effective tax rate for actual results.
(1) | Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments. |
8
Table 4
Net Sales by Segment - Unaudited
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||
(In $ millions) | |||||||||||||||||||||||||||||
Engineered Materials | 2,386 | 539 | 591 | 593 | 663 | 2,593 | 622 | 642 | 664 | 665 | |||||||||||||||||||
Acetate Tow | 636 | 148 | 158 | 164 | 166 | 649 | 161 | 158 | 162 | 168 | |||||||||||||||||||
Acetyl Chain | 3,392 | 771 | 867 | 865 | 889 | 4,042 | 936 | 1,006 | 1,049 | 1,051 | |||||||||||||||||||
Intersegment eliminations(1) | (117 | ) | (26 | ) | (30 | ) | (30 | ) | (31 | ) | (129 | ) | (30 | ) | (35 | ) | (31 | ) | (33 | ) | |||||||||
Net sales | 6,297 | 1,432 | 1,586 | 1,592 | 1,687 | 7,155 | 1,689 | 1,771 | 1,844 | 1,851 | |||||||||||||||||||
___________________________
(1) | Includes intersegment sales primarily related to the Acetyl Chain. |
9
Table 4a
Factors Affecting Segment Net Sales Sequentially - Unaudited
Three Months Ended December 31, 2019 Compared to Three Months Ended September 30, 2019
Volume | Price | Currency | Other | Total | ||||||||
(In percentages) | ||||||||||||
Engineered Materials | (9 | ) | — | — | — | (9 | ) | |||||
Acetate Tow | (6 | ) | — | — | — | (6 | ) | |||||
Acetyl Chain | (11 | ) | — | — | — | (11 | ) | |||||
Total Company | (10 | ) | — | — | — | (10 | ) | |||||
Three Months Ended September 30, 2019 Compared to Three Months Ended June 30, 2019
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | 2 | (2 | ) | (1 | ) | — | (1 | ) | ||||||
Acetate Tow | (2 | ) | (1 | ) | — | — | (3 | ) | ||||||
Acetyl Chain | 1 | — | (1 | ) | — | — | ||||||||
Total Company | 2 | (1 | ) | (1 | ) | — | — | |||||||
Three Months Ended June 30, 2019 Compared to Three Months Ended March 31, 2019
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | (7 | ) | (3 | ) | (1 | ) | — | (11 | ) | |||||
Acetate Tow | (1 | ) | — | — | — | (1 | ) | |||||||
Acetyl Chain | 2 | (4 | ) | (1 | ) | — | (3 | ) | ||||||
Total Company | (2 | ) | (3 | ) | (1 | ) | — | (6 | ) | |||||
Three Months Ended March 31, 2019 Compared to Three Months Ended December 31, 2018
Volume | Price | Currency | Other | Total | ||||||||
(In percentages) | ||||||||||||
Engineered Materials | 5 | 2 | — | — | 7 | (1) | ||||||
Acetate Tow | 1 | 2 | — | — | 3 | |||||||
Acetyl Chain | 5 | (10 | ) | — | — | (5 | ) | |||||
Total Company | 5 | (5 | ) | — | — | — | ||||||
Three Months Ended December 31, 2018 Compared to Three Months Ended September 30, 2018
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | (4 | ) | 2 | (1 | ) | — | (3 | ) | ||||||
Acetate Tow | 2 | (1 | ) | — | — | 1 | ||||||||
Acetyl Chain | (3 | ) | (4 | ) | (1 | ) | 1 | (7 | ) | |||||
Total Company | (3 | ) | (2 | ) | (1 | ) | 1 | (5 | ) | |||||
Three Months Ended September 30, 2018 Compared to Three Months Ended June 30, 2018
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | (2 | ) | — | (1 | ) | — | (3 | ) | |||||
Acetate Tow | (2 | ) | — | — | — | (2 | ) | ||||||
Acetyl Chain | (4 | ) | 2 | (2 | ) | — | (4 | ) | |||||
Total Company | (3 | ) | 1 | (2 | ) | — | (4 | ) | |||||
Three Months Ended June 30, 2018 Compared to Three Months Ended March 31, 2018
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | (1 | ) | 3 | (2 | ) | — | — | |||||||
Acetate Tow | (3 | ) | — | (1 | ) | — | (4 | ) | ||||||
Acetyl Chain | (2 | ) | 4 | (1 | ) | (1 | ) | — | ||||||
Total Company | (2 | ) | 3 | (1 | ) | — | — | |||||||
Three Months Ended March 31, 2018 Compared to Three Months Ended December 31, 2017
_________________________
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | 10 | 3 | 2 | — | 15 | (2) | ||||||||
Acetate Tow | 8 | — | — | — | 8 | |||||||||
Acetyl Chain | 8 | 9 | 3 | (2 | ) | 18 | ||||||||
Total Company | 9 | 6 | 2 | (1 | ) | 16 | ||||||||
(1) | 2019 includes the effect of the acquisition of Next Polymers Ltd. |
(2) | 2018 includes the effect of the acquisition of Omni Plastics, L.L.C. |
10
Table 4b
Factors Affecting Segment Net Sales Year Over Year - Unaudited
Three Months Ended December 31, 2019 Compared to Three Months Ended December 31, 2018
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | (9 | ) | (3 | ) | (1 | ) | — | (13 | ) | ||||
Acetate Tow | (8 | ) | — | — | — | (8 | ) | ||||||
Acetyl Chain | (4 | ) | (13 | ) | (1 | ) | — | (18 | ) | ||||
Total Company | (6 | ) | (8 | ) | (1 | ) | — | (15 | ) | ||||
Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | (4 | ) | (2 | ) | (2 | ) | — | (8 | ) | ||||
Acetate Tow | — | — | — | — | — | ||||||||
Acetyl Chain | 6 | (18 | ) | (2 | ) | — | (14 | ) | |||||
Total Company | 2 | (11 | ) | (2 | ) | 1 | (10 | ) | |||||
Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | (8 | ) | — | (3 | ) | — | (11 | ) | |||||
Acetate Tow | 1 | 1 | (1 | ) | — | 1 | |||||||
Acetyl Chain | (1 | ) | (14 | ) | (3 | ) | — | (18 | ) | ||||
Total Company | (3 | ) | (8 | ) | (3 | ) | — | (14 | ) | ||||
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | (3 | ) | 7 | (4 | ) | — | — | ||||||
Acetate Tow | (1 | ) | — | — | — | (1 | ) | ||||||
Acetyl Chain | (4 | ) | (8 | ) | (3 | ) | — | (15 | ) | ||||
Total Company | (3 | ) | (2 | ) | (4 | ) | — | (9 | ) | ||||
Three Months Ended December 31, 2018 Compared to Three Months Ended December 31, 2017
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | 2 | 7 | (2 | ) | — | 7 | |||||||
Acetate Tow | 5 | (2 | ) | — | — | 3 | |||||||
Acetyl Chain | (2 | ) | 10 | (2 | ) | (1 | ) | 5 | |||||
Total Company | — | 8 | (2 | ) | — | 6 | |||||||
Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | 7 | 6 | (1 | ) | — | 12 | |||||||
Acetate Tow | 5 | (3 | ) | — | (1 | ) | 1 | ||||||
Acetyl Chain | (3 | ) | 22 | — | (2 | ) | 17 | ||||||
Total Company | 1 | 14 | (1 | ) | (1 | ) | 13 | ||||||
Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017
Volume | Price | Currency | Other | Total | ||||||||
(In percentages) | ||||||||||||
Engineered Materials | 11 | 7 | 4 | — | 22 | |||||||
Acetate Tow | 1 | (2 | ) | — | — | (1 | ) | |||||
Acetyl Chain | 6 | 19 | 5 | (3 | ) | 27 | ||||||
Total Company | 7 | 13 | 4 | (2 | ) | 22 | ||||||
Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | 19 | 3 | 7 | — | 29 | ||||||||
Acetate Tow | (9 | ) | (4 | ) | 1 | — | (12 | ) | |||||
Acetyl Chain | 3 | 25 | 7 | (3 | ) | 32 | |||||||
Total Company | 7 | 14 | 6 | (1 | ) | 26 | |||||||
11
Table 4c
Factors Affecting Segment Net Sales Year Over Year - Unaudited
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | (5 | ) | — | (3 | ) | — | (8 | ) | |||||
Acetate Tow | (2 | ) | — | — | — | (2 | ) | ||||||
Acetyl Chain | (1 | ) | (13 | ) | (2 | ) | — | (16 | ) | ||||
Total Company | (3 | ) | (7 | ) | (2 | ) | — | (12 | ) | ||||
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
Volume | Price | Currency | Other | Total | ||||||||
(In percentages) | ||||||||||||
Engineered Materials | 9 | 6 | 2 | — | 17 | |||||||
Acetate Tow | — | (3 | ) | — | — | (3 | ) | |||||
Acetyl Chain | 1 | 19 | 2 | (2 | ) | 20 | ||||||
Total Company | 4 | 12 | 2 | (1 | ) | 17 | ||||||
12
Table 5
Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||
(In $ millions, except percentages) | |||||||||||||||||||||||||||||
Net cash provided by (used in) investing activities | (493 | ) | (168 | ) | (82 | ) | (66 | ) | (177 | ) | (507 | ) | (98 | ) | (78 | ) | (96 | ) | (235 | ) | |||||||||
Net cash provided by (used in) financing activities | (935 | ) | (199 | ) | (299 | ) | (307 | ) | (130 | ) | (1,165 | ) | (526 | ) | (383 | ) | (254 | ) | (2 | ) | |||||||||
Net cash provided by (used in) operating activities | 1,454 | 326 | 397 | 424 | 307 | 1,558 | 363 | 467 | 585 | 143 | |||||||||||||||||||
Capital expenditures on property, plant and equipment | (370 | ) | (144 | ) | (82 | ) | (65 | ) | (79 | ) | (337 | ) | (93 | ) | (79 | ) | (79 | ) | (86 | ) | |||||||||
Capital (distributions to) contributions from NCI | (10 | ) | (3 | ) | — | (3 | ) | (4 | ) | (23 | ) | (9 | ) | (6 | ) | (6 | ) | (2 | ) | ||||||||||
Free cash flow(1)(2) | 1,074 | 179 | 315 | 356 | 224 | 1,198 | 261 | 382 | 500 | 55 | |||||||||||||||||||
Net sales | 6,297 | 1,432 | 1,586 | 1,592 | 1,687 | 7,155 | 1,689 | 1,771 | 1,844 | 1,851 | |||||||||||||||||||
Free cash flow as % of Net sales | 17.1 | % | 12.5 | % | 19.9 | % | 22.4 | % | 13.3 | % | 16.7 | % | 15.5 | % | 21.6 | % | 27.1 | % | 3.0 | % | |||||||||
______________________________
(1) | Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operating activities, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our joint venture, Fairway Methanol LLC ("Fairway"). |
(2) | Excludes required debt service and finance lease payments of $24 million and $63 million for the years ended December 31, 2019 and 2018, respectively. |
13
Table 6
Cash Dividends Received - Unaudited
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||
(In $ millions) | |||||||||||||||||||||||||||||
Dividends from equity method investments | 168 | 42 | 15 | 41 | 70 | 221 | 62 | 44 | 39 | 76 | |||||||||||||||||||
Dividends from equity investments without readily determinable fair values | 113 | 24 | 27 | 30 | 32 | 117 | 25 | 26 | 34 | 32 | |||||||||||||||||||
Total | 281 | 66 | 42 | 71 | 102 | 338 | 87 | 70 | 73 | 108 | |||||||||||||||||||
Table 7
Net Debt - Reconciliation of a Non-GAAP Measure - Unaudited
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | ||||||||||||||||||||
(In $ millions) | |||||||||||||||||||||||||||||
Short-term borrowings and current installments of long-term debt - third party and affiliates | 496 | 496 | 368 | 319 | 743 | 561 | 561 | 229 | 366 | 425 | |||||||||||||||||||
Long-term debt, net of unamortized deferred financing costs | 3,409 | 3,409 | 3,359 | 3,444 | 2,933 | 2,970 | 2,970 | 3,196 | 3,228 | 3,343 | |||||||||||||||||||
Total debt | 3,905 | 3,905 | 3,727 | 3,763 | 3,676 | 3,531 | 3,531 | 3,425 | 3,594 | 3,768 | |||||||||||||||||||
Cash and cash equivalents | (463 | ) | (463 | ) | (497 | ) | (491 | ) | (441 | ) | (439 | ) | (439 | ) | (703 | ) | (708 | ) | (490 | ) | |||||||||
Net debt | 3,442 | 3,442 | 3,230 | 3,272 | 3,235 | 3,092 | 3,092 | 2,722 | 2,886 | 3,278 | |||||||||||||||||||
14
Table 8
Certain Items - Unaudited
The following Certain Items attributable to Celanese Corporation are included in Net earnings (loss) and are adjustments to non-GAAP measures:
2019 | Q4 '19 | Q3 '19 | Q2 '19 | Q1 '19 | 2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | Income Statement Classification | |||||||||||||||||||||
(In $ millions) | |||||||||||||||||||||||||||||||
Plant/office closures | 26 | 12 | 9 | 2 | 3 | 19 | 16 | — | 3 | — | Cost of sales / SG&A / Other (charges) gains, net / Gain (loss) on disposition of businesses and assets, net | ||||||||||||||||||||
Asset impairments(1) | 94 | 2 | 9 | 83 | — | — | — | — | — | — | Cost of sales / Other (charges) gains, net | ||||||||||||||||||||
Clear Lake incident | 34 | 32 | 2 | — | — | — | — | — | — | — | Cost of sales | ||||||||||||||||||||
Mergers and acquisitions | 12 | 3 | 2 | 4 | 3 | 33 | 6 | 3 | 11 | 13 | Cost of sales / SG&A | ||||||||||||||||||||
Actuarial (gain) loss on pension and postretirement plans | 88 | 88 | — | — | — | 166 | 166 | — | — | — | Cost of sales / SG&A / Non-operating pension and other postretirement employee benefit (expense) income | ||||||||||||||||||||
Restructuring | 27 | 6 | 7 | 15 | (1 | ) | 9 | 4 | 2 | 3 | — | SG&A / Other (charges) gains, net / Non-operating pension and other postretirement employee benefit (expense) income | |||||||||||||||||||
European Commission investigation | 89 | 89 | — | — | — | — | — | — | — | — | Other (charges) gains, net | ||||||||||||||||||||
Commercial disputes | 10 | 6 | — | 2 | 2 | — | — | — | — | — | Cost of sales / SG&A / Other (charges) gains, net | ||||||||||||||||||||
Other | 1 | — | — | 1 | — | 1 | — | — | 1 | — | SG&A / Gain (loss) on disposition of businesses and assets, net | ||||||||||||||||||||
Certain Items attributable to Celanese Corporation | 381 | 238 | 29 | 107 | 7 | 228 | 192 | 5 | 18 | 13 | |||||||||||||||||||||
______________________________
(1) | Includes $5 million of asset impairments in 2019 related to the Clear Lake incident. |
15
Table 9
Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited
2019 | 2018 | ||||||||||||||||
(In $ millions, except percentages) | (In $ millions, except percentages) | ||||||||||||||||
Net earnings (loss) attributable to Celanese Corporation | 852 | 1,207 | |||||||||||||||
Adjusted EBIT (Table 1) | 1,476 | 1,852 | |||||||||||||||
Adjusted effective tax rate (Table 3a) | 13 | % | 14 | % | |||||||||||||
Adjusted EBIT tax effected | 1,284 | 1,593 | |||||||||||||||
2019 | 2018 | Average | 2018 | 2017 | Average | ||||||||||||
(In $ millions, except percentages) | |||||||||||||||||
Short-term borrowings and current installments of long-term debt - third parties and affiliates | 496 | 561 | 529 | 561 | 326 | 444 | |||||||||||
Long-term debt, net of unamortized deferred financing costs | 3,409 | 2,970 | 3,190 | 2,970 | 3,315 | 3,143 | |||||||||||
Celanese Corporation stockholders' equity | 2,507 | 2,984 | 2,746 | 2,984 | 2,887 | 2,936 | |||||||||||
Invested capital | 6,465 | 6,523 | |||||||||||||||
Return on invested capital (adjusted) | 19.9 | % | 24.4 | % | |||||||||||||
Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital | 13.2 | % | 18.5 | % | |||||||||||||
16